California Insurance Lawyer Blog

LINA (Cigna) Life Insurance Denial: The Discretionary Clause Strikes Again

Mon, 30 Jan 2012 10:39:07 -0800

A recent Wall Street Journal article tells the story of our client Celina Whinery, who is suing Life Insurance Company of North America (LINA), a unit of Cigna, after the insurer refused to pay benefits the policy promised upon her husband’s death because he died in a one-car accident while legally intoxicated.

LINA argues that an insured who is legally intoxicated at the time of death is not entitled to benefits -- even though the policy does not exclude intoxication. Even though the policy language does not support LINA's argument, the insurer is forcing beneficiaries around the country to sue for benefits, and then appealing the cases it loses, which is most of them.

LINA knows how to exclude drunk driving from a claim for accidental death. It has a policy form that does exactly that. Those policies are less expensive however, since benefits are further limited. Instead, LINA sold a policy to CitiGroup (Mr. Whinery’s employer) in which it charged CitiGroup more money for a policy that did not exclude drunk driving. When Ms. Whinery made a claim on the policy (asking LINA to make good on their promise to pay), LINA denied the claim saying death due to drunk driving is not an accident and thus not covered. So, LINA makes more money by charging CitiGroup for the more expensive policy, but administers and denies claims as though they are dealing with the less expensive policies that expressly contain the exclusion.

LINA told Ms. Whinery that the policy defined accident. It didn’t. Moreover, the definition of accident LINA says was in the policy is not the definition of accident that the Appellate Court ruled applies in this type of case.

To make matters worse, LINA has an internal “authoritative” claims manual instructing that in cases of drunk driving, if there is no “intoxication exclusion” that claim must be paid.

So why is LINA forcing Ms. Whinery to sue for benefits? Mainly because federal law gives carriers of employer-based insurance the “discretion” to decide which claims they will – or will not – pay, as long as the decision is not "arbitrary or capricious."

Thankfully, California, enacted a law this year that now bans the enforcement of so-called "discretionary clauses" in insurance contracts (Insurance Code section 10110.6). Going forward, insurers will have to persuade the courts that their denials are supported by credible evidence. The law might not help Ms. Whinery, who told the Wall Street Journal, “Emotionally, you are going through a lot of things, and then to add this [unfair denial] on top, it makes it even worse.”

CBS News Comments on Policyholder's Fight with Bankers Life for Long Term Care (LTC) Benefits

Tue, 10 Jan 2012 09:36:56 -0800

A recent CBS News segment relates the story of Timber Harwood, a 93-year-old long-term care insurance policyholder fighting Bankers Life for benefits after he was seriously injured in a fall and needed the care of an in-home health aide. See “Some long-term healthcare policies not paying up,” http://www.cbsnews.com/8301-500202_162-57352805/some-long-term-healthcare-policies-not-paying-up/.

For more than a year, Bankers Life repeatedly “lost” or “misplaced” hundreds of pages of Harwood’s documents supporting his need for benefits while he used his life savings to pay for care. Things improved when Harwood’s niece – Kansas’s top insurance regulator – stepped in to help. Bankers Life eventually paid his claims, but then concluded he is “too healthy” to need in-home care, so the benefits stopped. Harwood and family are so worn down by the process they have decided not to pursue benefits.

The report concludes that LTC insurance isn’t paying as advertised and that customers should expect hefty premium increases.

We have also witnessed Bankers Life (and other LTC carriers’) claims handling practices, and have sued them to force them to pay. In our opinion, the worst thing a family can do is to give up the fight and let the carriers get away with not paying the benefits they owe.

Many people are successfully fighting their LTC carriers for benefits. Some of them have had to hire contingency fee lawyers like us to do it, but they made the decision that it’s more sensible to attempt hold their insurer accountable then spend their life savings on care they paid an insurance company to provide for.

Every LTC carrier is going to make you prove you need benefits, and some won’t make the task easy. Others will make the process discouraging and next to impossible. When that happens, find someone who understands how to deal with LTC insurers to help you. Most people aren’t as lucky as Mr. Harwood was to have an insurance regulator in the family to come to the rescue. Still, family members can help by calling and writing letters to the insurance company and demanding that they act expediently. Complain to the insurance commissioner of your state if the company does not respond to your inquires, or is acting irresponsibly. Usually, squeaky wheels get the grease. If all else fails, find an attorney with experience in this area.

We sincerely hope Mr. Harwood is indeed too healthy to need LTC benefits, but if he isn’t he shouldn’t give up the fight. And no one should. If Bankers Life or any other insurance carrier has denied your benefits, fight for your rights and make them pay what they owe!

Glenn Kantor and Corinne Chandler to Present National Business Institute Teleconference on Long Term Care Legal Issues

Fri, 30 Dec 2011 13:21:12 -0800

Kantor & Kantor partners Glenn Kantor and Corinne Chandler will present a National Business Institute teleconference “Troubleshooting Long Term Care Insurance Claims,” Thursday, January 26, 2012, at 10:00 a.m. Pacific time. The presentation, designed for a national audience of lawyers seeking to expand their knowledge about claims-handling practices and litigation strategies, provides up to two hours of continuing education credit. Topics the program covers include an overview of the state of the long-term care insurance industry, how to analyze common long-term claims and benefits denials, and creative litigation tactics.

For more information, or to register, follow this link: http://www.nbi-sems.com/SemTeleDetails.aspx/R-58789ER%7C?ctname=SPKEM.

The National Business Institute is one of the nation’s largest providers of legal and professional education, serving over two million professionals.

Kantor & Kantor is one of the largest law firms in the country exclusively representing plaintiffs who have been denied insurance benefits from life, health disability and long-term care policies. The firm has extensive experience with the complex appeals process and federal court litigation of ERISA matters. For more information, call (800) 446-7529.

Insurers Incorrectly Rely Upon ‘Magic Johnson Effect’ in Case Regarding AIDS Disability Benefits

Mon, 28 Nov 2011 13:54:53 -0800

We are about to bring a case to trial for a client who is disabled by AIDS-related symptoms, and has been since 1994. For more than 15 years, our client had proven his inability to work in any occupation, and Fort Dearborn Life Insurance Company paid benefits according to his disability policy. Without any warning, however, Fort Dearborn terminated our client’s long term disability benefits -- even though the medical evidence regarding his symptoms and the Social Security Administration’s disability determination remained unchanged.

What Fort Dearborn claimed had changed, according to its surveillance of our client, was his ability to perform limited activities of day-to-day living. Notably, for over a decade, our client had informed Fort Dearborn that he was capable of exactly that level of limited activity. So why the termination?

In its argument to the Court, and without a scintilla of evidence to support the claim, Fort Dearborn wrote:

“[Plaintiff] completely ignores the fact that there have been advances in medicine and numerous examples of HIV patients who have gone on to lead meaningful and industrious lives.”
…
“The former National Basketball Association player, Ervin [sic] 'Magic’ Johnson is one such example.”

Essentially, if Magic is fine, the argument goes, our client is fine.

Twenty years ago Earvin “Magic” Johnson made an announcement that altered the public’s perception of himself and HIV/AIDS. Clearly Magic’s courage in publicly confronting this disease had a significant positive impact on the public’s awareness of the actual facts regarding HIV/AIDS.

In 1991, it was widely believed that Magic’s announcement was tantamount to a death sentence. People had a real impression of the hardship faced by those suffering from HIV/AIDS. Fortunately, the medical landscape did change. Treatments improved, as did the quality of life for some, but not for all.

Magic started taking a cocktail of up to 15 pills per day, and he lived. The symbol of HIV/AIDS in America, Magic’s life changed the public’s perception of those suffering from HIV/AIDS. As Associated Press Sports Writer Greg Beacham put it, “with two subsequent decades of vibrant living, [Magic] forever altered attitudes about the virus and its effects.” See, “Magic Johnson Still Beating HIV 20 Years Later.”

Sadly, the current perception of those suffering from HIV/AIDS is one of a vibrant, vigorous, and successful businessman. For all too many, this perception is also dead wrong.

Our client continues to suffer from disabling fatigue, painful neuropathy caused by his AIDS medications, and ever present, embarrassing diarrhea. This is the reality of many suffering from symptoms due to HIV/AIDS. It is also a reality that is obscured by his prominence in the public’s eye, as Magic himself reminded Beacham:

“‘I often say I’m good for the virus, and bad for it,’ Johnson said. ‘Good because I’m doing well, and that I can go out and try and raise the awareness level, get people to go get tested…but on the flip side of that, people see that I’m doing well, so they’ve kind of relaxed on HIV and AIDS. People think that now if they get the virus, they’ll do well…’”

It is not a new message that Magic is trying to spread. Five years ago Magic was quoted in USA Today: “‘You can’t take that attitude that you’re going to be like Magic,’ says Johnson…. ‘The virus acts different in all of us. There’s no certainty that if you get the virus, you’re going to be OK.’” See, “Magic Johnson Combats AIDS Misperceptions.”

But public perception is powerful, even if it has little relation to reality, and insurers are not reluctant to use misperceptions to bolster their arguments. As a result, those not as fortunate as Magic will face increased prejudice and, like our client, the all too real consequence of those misperceptions.

We believe we can get the Court to understand this, and to force Fort Dearborn to pay our client the benefits he deserves.

If you have encountered misperceptions leading to Long Term Disability benefits terminations for AIDS-related or any other disability, contact us at (800) 446-7529. We can help.

Life Insurance Company of North America Refuses to Pay Life Insurance Claim

Fri, 18 Nov 2011 10:27:32 -0800

Life Insurance Company of North America (LINA) insured the life of Timothy Whinery. Mr. Whinery died in a tragic automobile accident. His wife eventually made a claim for life insurance benefits under the LINA policy. Incredibly, even though the LINA policy promised to pay benefits for a loss "caused by an accident," the policy did not define the term "accident." Worse, in this case LINA determined that Mr. Whinery's death was not caused by an accident, and so refused to pay. The facts are a bit complicated, but in essence, LINA said that because Mr. Whinery was legally intoxicated at the time of the accident, his death was "foreseeable," and foreseeable consequences cannot be deemed accidental.

What's worse, LINA actually sells life insurance policies that contain specific provisions precluding benefits when death is caused by driving while intoxicated, but the Whinery policy DID NOT contain any such exclusion. This claim should have been paid! Our view is that LINA is acting unreasonably and in bad faith in continuing to deprive the Whinery family of the life insurance benefits they paid for. You can read more details in a Lawyers.com blog item by clicking on this link: DWI Death an Accident, Insurer's Claim Rejection Not

The case is filed in the Central District of the United States District Court and is assigned to the Honorable Percy Anderson, Judge Presiding. Trial is currently set for December 20, 2011.

Attorneys Alan Kassan and Corinne Chandler are presenters at the 21st Annual Western Region Chapter of the National Association of Professional Geriatric Care Managers held at the Bellagio Hotel in Las Vegas November 3-5

Tue, 01 Nov 2011 09:48:49 -0800

PRESS RELEASE:

LOS ANGELES, October 31, 2011 -- Kantor & Kantor, LLP announced today that lawyers Alan Kassan and Corinne Chandler are presenters at the 21st Annual Western Region Chapter of the National Association of Professional Geriatric Care Managers held at the Bellagio Hotel in Las Vegas November 3-5. The session, “Obtaining Insurance Benefits for Your Client’s Care,” is scheduled for Friday, November 4, at 2:15.

“Many people purchased long-term care insurance decades ago and before many of today’s senior care options were even contemplated,” said Mr. Kassan, a Kantor & Kantor partner who sues insurance companies on behalf of individuals denied long-term care. “As a result, since most many present care options are not enumerated in polices, and insureds have to appeal or litigate to ensure benefits for the most appropriate long-term care. Part of what we do is educate professionals in the geriatric care industry about how to understand insurance policy language and to help their clients with the legal process.”

A common reason LTC carriers deny benefits is because the policyholder resides in an assisted living facility but the 20-year-old policy doesn’t cover such facilities, which were not an option until recent years. Kantor & Kantor has successfully litigated the issue, allowing policyholders to receive benefits for assisted living.

“As the Baby Boomer population ages and requires care, we expect more options to arise for which insurers will deny coverage,” said partner Corinne Chandler. “When geriatric care professionals understand that insurance companies don’t always have the last word, they can better help their clients navigate the often complex long-term care legal environment."

About Kantor & Kantor, LLP
Kantor & Kantor is one of the largest law firms in the country exclusively representing plaintiffs who have been denied insurance benefits from life, health, disability and long-term care policies. The firm has extensive experience with the complex appeals process and federal court litigation of ERISA matters. For more information, log on to www.kantorlaw.net, call (800) 446-7529, or follow the firm at www.californiainsurancelawyerblog.com.

Governor Jerry Brown has signed into law S.B. 621 - The "Discretionary Authority" Bill

Mon, 03 Oct 2011 17:21:48 -0800

Kantor & Kantor is pleased to announce that Governor Jerry Brown has signed into law S.B. 621. California State Senator Ron Calderon first proposed the legislation, which regulates life and disability insurance policies, and bans discretionary clauses in such. Previously, insurers included such clauses in group insurance policies and certificate, granting themselves the power to interpret terms of the policies, and to make eligibility determinations based on their own interpretations. This law provides that if a policy, contract, certificate, or agreement offered, issued, delivered, or renewed, whether or not in California, that provides or funds life or disability insurance coverage for any California resident contains a provision that reserves discretionary authority to the insurer, or an agent of the insurer, to determine eligibility for benefits or coverage, to interpret the terms of the policy, contract, certificate, or agreement, or to provide standards of interpretation or review that are inconsistent with the laws of California, that provision would be void and unenforceable.

The law authorizes the Insurance Commissioner to adopt regulations reasonably necessary to implement these provisions.

This law will change how federal Judges consider insurance cases going forward. Previously, in the event a disabled person filed a lawsuit against an insurance company that had included a discretionary clause in its policy, the federal Judge reviewing the case would be required to defer to the insurer’s decision, rather than look at the evidence for and against disability, and weigh it accordingly. In essence, the Judge would have to assume the insurer was correct in denying a claim, unless the plaintiff could prove that the insurer’s decision was arbitrary, unreasonable, capricious or clearly wrong. The scales were tilted, in favor of the insurers, who had self-granted discretion. Now, the scales will be level again.

ERISA (which stands for the Employee Retirement and Income Security Act) was a federal law passed in 1974 which governs, among other things, employee benefits. This law governs cases brought by, for example, disabled employees who are seeking their employer-provided disability insurance benefits, which have been denied. Because these employer-provided benefits fall under the governance of the federal ERISA law, any lawsuits for such benefits must be filed in federal court. The ERISA statute only applies to life and disability insurance policies, NOT health insurance policies. Hopefully, the law will soon be expanded to encompass health coverage.

Glenn Kantor was instrumental in assisting in the passage of this bill. He provided expert testimony in California state legislative hearings in Sacramento, and continues to fight for his clients whose policies may or may not contain such discretionary provisions.

For more details you can visit Senator Calderon's site: http://dist30.casen.govoffice.com

Lisa Kantor to Participate in Live Q&A About Insurance and Eating Disorders

Mon, 26 Sep 2011 22:16:02 -0800

The International Association of Eating Disorder Professionals will stream an encore of Kantor & Kantor partner Lisa Kantor’s 2011 symposium presentation How to Document Evidence Based Treatment to Maximize Insurance Reimbursement, followed by a live teleconference call with Ms. Kantor Tuesday, Sept 27, 200, at 7 pm ET/6 pm CT/5 pm MT/4 pm PT. The presentation reviews insurance carrier criteria for treatment of eating disorders and explains how evidence-based treatment records can be documented to best maximize the client's available insurance benefits.

“A provider's treatment records are the foundation for establishing medically necessity for admission and continued treatment,” says Ms. Kantor, who has been recognized as one of the top lawyers in the country representing policyholders denied benefits for treatment of eating disorders. “Evidence-based treatment records must show plans of care, symptoms, and objective evidence that satisfy an insurance company's criteria for admission and continued care.”

Although only IAEDP members may participate in the live session, nonmembers and others unable to attend may submit questions about insurance benefits for eating disorder treatment to Rachel Teicher at rteicher@kantorlaw.net before, during and after the live session.

IAEDP members may register for the call by following this link: http://myaccount.maestroconference.com/conference/register/XVQ38AL38L6GVOVQ.

The 90-minute presentation is available for preview through this link: http://player.netromedia.com/?ID=5a57395a-560a-4073-9562-13acf1b7f32c&path=/IAEDPKantor%20in%20wmv.wmv.

Additional materials may be downloaded here: http://www.kantorlaw.net/Areas_of_Practice/Eating_Disorders/2011_IAEDP_Materials.aspx.

New Poll Reports Californians Wary of Insurer Duplicity Surrounding Long Term Care (LTC) Policy Purchases

Mon, 26 Sep 2011 18:08:21 -0800

Results from the latest field poll conducted by the California Partnership for Long-Term Care are not surprising. Although more people are aware they will likely need long-term care benefits in the future, fewer are purchasing policies. See, “Californians Know They Need Long Term Care Coverage, But Don’t Buy It.”

According to the survey, state residents purchased 22,000 fewer policies in 2008 than they did in 2000. About 30 percent of the respondents expressed concerns that insurance companies would fail to honor their policies as their chief reason for not purchasing LTC insurance.
That’s a legitimate concern, as we well know.

Do your research and choose a reputable company offering the best policy you can afford. While the LTC component of President Obama’s healthcare overhaul (aka the CLASS Act) may offer some attractive alternatives for some, be aware that experts predict the launch will be delayed by as much as a year as the administration tries to create an inexpensive yet sound program.

If and when the time comes you have to fight for Long Term Care insurance benefits, call us to hold your insurer accountable.

For more information about obtaining LTC benefits after delays or denials, call 800-446-7529.

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ISSUES SIGNIFICANT RULING ON CALIFORNIA'S MENTAL HEALTH PARITY ACT

Fri, 26 Aug 2011 13:37:40 -0800

Thanks to the excellent efforts of attorneys Lisa Kantor and Elizabeth Green of Kantor & Kantor, LLP, the Ninth Circuit Court of Appeal issued an important decision on August 26, 2011 favoring policyholders in California. The question before the court was whether or not Blue Shield was required to pay for plaintiff's care at a residential treatment facility. The court held that although, technically, the terms of Jeanene Harlick's health insurance policy with Blue Shield did not require coverage, the California Mental Health Parity Act absolutely did require Blue Shield to pay for treatment. Ms. Harlick has suffered from anorexia nervosa for more than 20 years. In 2006 and 2007 she spent time at a residential treatment facility in an effort to help her cope with her eating disorder. Blue Shield refused to pay the substantial cost for that treatment.

The Ninth Circuit Court of Appeal’s opinion in Harlick is a major victory for all of those who are insured by Blue Shield of California and who suffer from eating disorders A stay in a residential facility that provides 24-hour supervision can be a crucial part of the successful treatment of an eating disorder. Almost all insurance companies that provide behavioral health benefits provide coverage for residential treatment. Blue Shield is one of the few insurers who exclude such treatment, while providing coverage for all other levels of care. The California Mental Health Parity Act requires insurance companies to provide coverage for the treatment of “severe mental illnesses,” including anorexia and bulimia, on the same terms and conditions as it does for physical illnesses. In its decision today, the Court held that the Mental Health Parity Act requires an insurer to provide all medically necessary treatment for eating disorders, including residential treatment, even if the insurance plan has an exclusion for that treatment.

The full text of the decision can be read by clicking here:

HARLICK v. BLUE SHIELD OF CALIFORNIA

New Regulations Regarding Homeowners’ Insurance from the California Department of Insurance

Mon, 11 Jul 2011 18:16:22 -0800

Insurance Commissioner Dave Jones recently announced that the California Department of Insurance is implementing new regulations to protect California home owners from being underinsured in the event of a disaster. These regulations target the homeowners insurance industry, and have been established to ensure that consumers who are victims of a disaster, such as an earthquake or wildfire, will be able to get the necessary financial relief to rebuild their homes. The regulations have been formulated to address the common problem of underinsurance that many homeowners face.

The new regulations include provisions:
- requiring insurers to create more consistent, comprehensive and accurate replacement cost calculations;
- requiring insurers to establish clear training standards for agents and brokers who sell homeowner’s insurance;
- creating standards for real estate appraisers who estimate replacement cost for insurance purposes;
- requiring the application of certain standards when estimating cost for insurance purposes;
- establishing record keeping requirements

The Association of California Insurance Companies and the Personal Insurance Federation of California (on behalf of Farmers Insurance, Liberty Mutual Group, Progressive Insurance Company, State Farm Insurance Companies, Allstate Insurance, Mercury Insurance, and other insurers) have jointly filed a lawsuit seeking to block these consumer-friendly regulations. The complaint alleges that the regulations restrict insurer underwriting, which is not an area regulated by the Department of Insurance. In response, Commissioner Jones has commented that the insurers “have clearly missed the mark with this lawsuit and their argument simply has no merit” not least because “the replacement cost regulation has nothing to do with underwriting. The industry is free to decide which customers to sell to and at what price, as long as they comply with the voter-approved initiative Proposition 103, make rate filings with the Department, and get them approved. This is just another attempt, in a long line of many, by the insurance industry to strip consumers of the protections they deserve.”

Can advertisements trigger eating disorders? Maybe and General Mills Acts Responsibly About the Issue

Thu, 07 Jul 2011 17:18:10 -0800

The National Eating Disorders Association (NEDA) commends General Mills for pulling a controversial television commercial for Yoplait yogurt off the air after NEDA voiced concerns that the commercial may encourage disordered eating behaviors.

The commercial shows a thin woman agonizing over the decision of whether or not to eat a piece of raspberry cheesecake. Her internal dialogue shows her rationalizing the choice to eat a slice if she only ate celery sticks for dinner or if she jogged in place while eating it. This is typical of the type of bargaining and rationalizing about food choices conducted by sufferers of eating disorders every time they are confronted with a choice about food. When Lynn Grefe, president and CEO of NEDA and her colleagues first saw the commercial, what they saw wasn’t a woman making a healthy food choice, but one who was caught up in a compensatory exchange about food, Grefe said. “This felt like a 20 second look at the mind of somebody with an eating disorder.”

General Mills responded to the concerns by immediately taking the commercial off the air. Tom Forsythe, vice president of corporate communications for General Mills said, “[A]ny correlation was certainly unintentional. But if even a few people could take from the ad that mis-impression, then the right thing to do was to pull the ad—and we have.” In a public statement, Grefe thanked Yoplait and General Mills for addressing their concerns so quickly and stated, “I believe the company had no intent to harm and gained insight into a very serious issue that we hope will influence their marketing decisions in the future.”

To view the entire commercial and further commentary, go to:
http://shine.yahoo.com/channel/health/does-this-commercial-encourage-eating-disorders-video-2497971/
National Eating Disorder Association (NEDA) website: www.nationaleatingdisorders.org

ERISA Disability Claims - Submit all Evidence During Appeal

Tue, 05 Jul 2011 16:48:49 -0800

If you have group disability insurance (through your employment), it is probably governed by the Employee Retirement Income Security Act (ERISA). If your disability claim is denied, under ERISA, you must appeal the denial prior to filing a lawsuit in federal court. We often handle appeals for clients. These appeals offer an opportunity to submit all evidence of disability, including medical records, results of evaluations designed to measure a person’s ability to work, doctor’s clinical notes, physical therapy notes, and even personnel files showing that a person performed well on the job, prior to stopping work due to disability. Generally, the appeal is the last chance a person has to submit evidence of disability, as a court may not hear witnesses or consider other evidence outside of what was generated during the claim and appeal period. GETTING ALL YOUR EVIDENCE TO THE INSURANCE COMPANY DURING THE APPEAL PERIOD IS THUS CRITICAL.

Interestingly, we have been noticing that when we submit appeals, claims representatives for insurance companies are attempting to return portions of the evidence we are submitting. This includes such things as information about medications and their side effects, relevant case law, and even video footage we sometimes produce to prove to the insurance company how physically-disabled and limited our clients are. The insurance companies have not produced any legal authority for returning information submitted on appeal, and we promptly send it back. In fact, this type of claims handling by an insurer is prohibited by the ERISA regulations, as among other things, it denies a claimant of her right to a full and fair review of her disability claim. Such a fair review is certainly informed by the claimant’s submission of all evidence which she feels may support her claim for disability.

This tactic by the insurers is a bold attempt to deny claimants full and fair reviews of their claims, as required by law. Worse, to the unsuspecting applicant, the insurance companies might get away with this practice, and thus deny the claimant the right to have all evidence before a court should the matter make its way to litigation. If this has happened to you, push back. If an insurance company is mistreating you or not playing fair in some other way, question them...and always do do in writing, with proof of mailing (or emailing).

If you have questions, or need help with an appeal, visit our website, or call us. We fight these battles every single day. Initial consultations are free. 818-446-7529.

9th Circuit Finds Aetna Abused Discretion in Denying Benefits to Policyholder With MS -- Aetna Failed to Engage in ‘Meaningful Dialogue’ to Obtain Objective Evidence

Thu, 30 Jun 2011 12:07:22 -0800

Kantor & Kantor, LLP overcame a significant challenge in the 9th U.S. Circuit Court of Appeals on behalf of client Debbie U., who suffers from Multiple Sclerosis. The 9th Circuit ruled that Aetna Life Insurance Co. abused its discretion and wrongfully denied Debbie’s short-term and long-term disability benefits. A decision of this type, ruling on the record rather than remanding to the district court to correct its errors, is extremely rare in ERISA litigation.

This ruling ends Debbie’s six-year struggle with her employer’s disability plan which was administered and insured by Aetna. Debbie’s ultimate victory required two trials and two appeals to the 9th Circuit. After the first trial, the appellate court remanded the case to the district court to reconsider evidence of Aetna’s conflict of interest. After the second trial in which the district court ruled that Aetna had not abused its discretion, the 9th Circuit again accepted the appeal and reversed the trial court decision outright.

“The history of this case reads like a textbook example of insurer tactics to delay and discourage policyholders from pursuing the benefits they rightfully deserve,” said Corinne Chandler, the Kantor & Kantor lawyer who argued the case. “The 9th Circuit’s examination and specific findings demonstrate the importance of challenging denials that don’t make sense or rely on faulty medical evaluations.”

The appellate court found two major reasons to be skeptical of the trial court’s analysis that Aetna did not abuse its discretion, a legal term of art that applies to discretionary clauses in many disability insurance policies. Without finding that the insurer “abused its discretion,” courts cannot modify an insurer’s denial of benefits, even if the decision was wrong on the merits of the claim.

First, even though the policy required Debbie to apply for Social Security Disability Benefits, which she obtained, Aetna refused to consider the Award of those benefits (which was based on a more stringent disability standard), as evidence of Debbie’s disability. Second, although Aetna claimed Debbie did not supply the objective medical evidence it required, the 9th Circuit found Aetna’s request too vague and that the insurer did not engage in the “meaningful dialogue” the law requires in order for a policyholder to fully understand and supply the necessary information upon which the insurer would base its benefits award.

“This decision is an encouragement to policyholders who comply with insurers’ exhaustive demands and are left wondering why benefits are denied,” said Glenn Kantor, founding partner of Kantor & Kantor. “Courts have the ability to force insurers to follow up on the dictates of their own policies and make sure policyholders understand what documentation is necessary for a fair and honest benefits evaluation.”

The Court's Opinion can be read here: http://www.ca9.uscourts.gov/datastore/memoranda/2011/06/22/10-55018.pdf

About Kantor & Kantor, LLP
Kantor & Kantor is one of the largest law firms in the country exclusively representing plaintiffs who have been denied insurance benefits from life, health, disability and long-term care policies. The firm has extensive experience with the complex appeals process and federal court litigation of ERISA matters. For more information, log on to www.kantorlaw.net, call (800) 446-7529.

Ninth Circuit Says Insurance Companies are Proper Defendants in ERISA Welfare Plan Lawsuits

Wed, 22 Jun 2011 18:10:39 -0800

After years of uncertainty, an important legal question was finally resolved by the United States Court of Appeals for the Ninth Circuit in an opinion, Cyr v. Reliance Standard Life, issued today, June 22, 2011.

Sitting en banc, the Court considered whether or not an insurance company, acting as the administrator for an ERISA group disability plan, could be sued in its own name as a defendant in a lawsuit for benefits. For years, insurance companies have been arguing that they are not proper party defendants. The companies have successfully been forcing plan beneficiaries to try and track down plan administrators -- who are sometimes difficult to find, or expensive to serve -- in order to timely and properly file a lawsuit. Suing a plan administrator of an insured plan is nothing more than a charade, as it is the insurance companies who usually have final say about whether benefits will be paid. Because of a loophole in the law, insurers were able to frustrate plan participants who wanted to sue for benefits but who were not able to identify and/or properly serve the plan administrator. That game is now over.

Writing for the Court, Chief Judge Alex Kozinski said "[w]e conclude, therefore, that potential liability under 29 U.S.C. § 1132(a)(1)(B) is not limited to a benefits plan or the plan administrator." The Court went further and overruled previous authority which has been used for years by insurance companies to thwart plaintiffs: "Any statements or suggestions to the contrary in our prior decisions, including Ford v. MCI Communications Corp. Health & Welfare Plan, 399 F.3d 1076, 1081 (9th Cir. 2005); Everhart v. Allmerica Financial Life Insurance Co., 275 F.3d 751, 756 (9th Cir. 2001); Spain v. Aetna Life Insurance Co., 13 F.3d 310, 312 (9th Cir. 1993); and Gelardi v. Pertec Computer Corp., 761 F.2d 1323 (9th Cir. 1985), are overruled."

The Court's full decision can be read by clicking this link: http://www.ca9.uscourts.gov/datastore/opinions/2011/06/22/07-56869.pdf